Taxing Situation
MTV’s Jersey Shore premiered in late 2009 and quickly became the network’s most-watched series ever. Cast members Nicole “Snooki” Polizzi, Mike “The Situation” Sorrentino, Jennifer “JWoww” Farley, and their outrageous, hard-partying housemates have become New Jersey’s most famous family since The Sopranos, trying their best to put the “fun” back in “dysfunctional.”
Of course, not everyone was in on the joke. Critics objected that the show painted New Jerseyites and Italian-Americans as drunken, brawling louts, obsessed with their “GTL” (gym, tanning, and laundry, for those not in-the-know). New Jersey Governor Chris Christie was so embarrassed at their antics that he vetoed a $420,000 tax credit, dubbed the “Snooki subsidy,” for the show’s producers. “As Chief Executive,” he explained, “I am duty-bound to ensure that taxpayers are not footing a $420,000 bill for a project which does nothing more than perpetuate misconceptions about the state and its citizens.”
Now the Jersey Shore crew is making tax news again. But this time, the numbers are even higher and the consequences even more serious. Last week, the U.S. Department of Justice indicted “The Situation” for one count of conspiracy, two counts of filing false tax returns for 2010 through 2012, and one count of failing to file a return for 2011.
Sorrentino and his castmates may look like the sort of people the word “bonehead” was invented to describe. But when it came to cashing in on their 15 minutes of fame, they weren’t slouches. Snooki made as much as $30,000 per episode, commanded $10,000 for personal appearances, and rang the bell to open the New York Stock Exchange. Sorrentino was even more ambitious, charging up to $48,000 for nightclub openings and other events. He also earned millions more from endorsements, a partnership in a vodka company, an “autobiography,” a workout DVD, clothing and vitamin lines, and a comic book featuring himself as a shirtless superhero. (The guy made more than $5 million in 2010 alone, which has to make you wonder if you’re in the right business — and if there’s any justice in the world.)
Now the government is alleging that Sorrentino and his brother Marc avoided tax on $8.9 million of income. The indictment charges that they submitted false documents understating their receipts, and false personal returns failing to report all their income. They also fraudulently “claimed millions of dollars in personal expenses as business expenses, including payments for high-end vehicles and clothing, personal grooming expenses, and distributions – or direct payments – from the businesses to personal bank accounts.” It’s easy enough to believe that a guy who made his fame on “gym, tanning, and laundry” would think he could deduct the occasional tube of hair gel. Still, $8.9 million does seem a bit excessive.
Sorrentino has pled not guilty to the charges. Meanwhile, he’s free on $250,000 bail. He’s surrendered his passport and agreed not to leave the New York-New Jersey area. He’s also subject to random drug testing and prohibited from drinking alcohol until his trial. Of course, a little sobriety looks like a holiday on the shore compared to what he’s facing if he’s convicted — the conspiracy charge alone could mean five years in a tightly structured living environment that discourages expressions of personal dress and style.
Sadly, “The Situation” isn’t the only Garden State reality star facing IRS heat. “Real Housewife of New Jersey” Teresa Giudice and her husband are awaiting sentencing on their own tax and fraud charges. What’s the matter with these people? Don’t they know the real key to paying less tax is a plan? And don’t they know they could have come to us for that plan? Don’t embarrass your castmates like they did. Call us, and we’ll script out a plan that helps you enjoy endless summers on whatever shore you choose.
In The Headlines
Nike’s Midas Touch: More Options, More Prices, More Sales
Recently, Nike added $7.5 billion to its market value after posting a dazzling financial report. Like an athlete “in the zone,” even the riskiest plays are paying off for Nike. Last quarter the firm poured almost $900 million into ads and athlete sponsorships, 23% more than in the year-earlier period, as it tried to put its mark on the World Cup. It was a huge amount of money, but it also ensured Nike cleats were on Mario Götze when the German soccer phenomenon swatted home the championship-winning goal in overtime.
Advertising aside, the company is also performing well with its basic blocking and tackling. Its supply chain is tight and its online store is humming, which helped Nike post a 30% increase in direct-to-consumer sales. And it finally seems to have figured out the China market, where it realized an 18% sales boost in the country during the recent quarter. Underneath all of this, however, was a far less nuanced strategy: charge more money.
Nike said it pushed the average selling price for its namesake brand up 5% in the past year. For every $100 pair of sneakers Nike sells these days, it pockets $46.60. Another $34.50 of that goes to paying executives, taxes, and LeBron James, but it is still a towering gross margin. Nike Chief Financial Officer Donald Blair said the company is finding “tremendous strength” at the top end of the market. In the current period, Nike said, it is going to push that boundary even further, capturing another $1.50 for every $100 sale.
The company claims that it is able to push through these prices increases because of branding and innovation. For example, make a new sneaker fabric, then pay Cristiano Ronaldo to market it. But there is more to it than that. Nike works tirelessly to make sure there is no such thing as a standard product and thus no such thing as a standard price.
At Nike, the product choices are virtually limitless. Take men’s running shoes. There are 81 different models on the Nike Web store today, with prices ranging from $40 to $225. Even a runner who knows what he likes is going to have trouble arriving at any kind of stable price level. Someone dedicated to Nike’s Free 4.0, for example, would come across six options for this shoe on the website, ranging from $70 to $120.
The prices vary further based on where the shopper lives or, if a buyer shops the old-fashioned way, to which stores she/he goes. “We’re working on pricing at a style-by-style level, at a market-by-market level,” Trevor Edwards, president of the Nike brand, explained to analysts. In basketball and soccer, Nike throws in yet another wrinkle with its limited-edition releases, like the fancy $400 Jordan Shine that goes on sale tomorrow morning.
Not only does the endless product tweaking keep customers guessing about how much Nike’s products cost, but it separates them by willingness to pay. The company is never going to settle for a measly $70 from a customer who is more than happy to pay $200 for a pair of running shoes. Nike shoes, like its shares, are more expensive than ever. But it seems that no one has noticed.
The Doctor Will See You Now – at your Pharmacy or Grocer
Hospitals and health systems are negotiating more clinical deals with retailers like CVS/Caremark and Walgreen as traditional providers of medical care work to capture more health care dollars from newly insured Americans under the Affordable Care Act.
Increasingly the giant drugstore chains, Wal-Mart, and even some grocers like Kroger and Safeway are trying to integrate their pharmacy businesses into patient-centered medical homes, or become part of accountable care organizations (ACOs) which link medical care providers to improve quality. The idea is to improve health outcomes and ACOs need pharmacists or retail health clinics to do that, given their historic access to patients at the pharmacy counter.
In the latest of the growing number of such deals, CVS recently signed new clinical affiliations with four health systems including Memorial Health in Georgia and Lahey Health in Massachusetts. That brings the total number of clinical affiliations for CVS/Caremark and its Minute Clinic subsidiary to 36 health systems across the country, including the Cleveland Clinic and Henry Ford Health System.
“We look forward to working with these health systems to develop collaborative programs that improve patient outcomes, lower costs, and help people on their path to better health,” CVS/Caremark chief medical officer Dr. Troyen Brennan said in a statement accompanying the pharmacy chain’s announcement. “Through these clinical affiliations, we will also be integrating our electronic medical records and information systems to enable us to support patients with medication counseling and chronic disease monitoring.” Meanwhile, recent partnerships Walgreen has engineered bring that retail pharmacy giant’s clinical affiliations with health systems to 20, including Ochsner Health System in New Orleans and Johns Hopkins in Baltimore.
The pharmacies bring to the table retail clinics staffed by advanced degree nurses known as nurse practitioners that treat routine maladies like strep throat and pink eye. In addition, the pharmacies are getting their pharmacists more involved in patient care by collaborating with health systems on joint clinical programs and “care coordination activities,” according to CVS.
Retailers also increasingly see themselves as a primary care option, particularly given a shortage of primary care physicians that is expected to only worsen with millions more Americans getting health benefits under the Affordable Care Act beginning in January 2015. The ACOs rely heavily on outreach to patients via primary care doctors, nurse practitioners, and pharmacists like those at CVS and Walgreen that help patients adhere to their prescriptions, stay healthy and out of the more expensive hospital.
“These collaborations give Walgreens and Healthcare Clinic an opportunity to further support and complement provider practices and patients’ medical homes, offering expanded access, convenient locations and hours, and a broad range of services, including those for treatment and management of certain chronic conditions,” says Dr. Jeff Kang, Walgreens senior vice president of health and wellness. “More and more providers are recognizing the value we provide as a strategic health care partner and the important role our pharmacists and nurse practitioners can play in supporting continuity of care and working collaboratively to help improve patient outcomes.”
Sources:
1. http://buswk.co/10ahVZp – Businessweek
2. http://onforb.es/1sQj5QE – Forbes
The Good News Is . . .
• Sales of new U.S. single-family homes surged in August and hit their highest level in more than six years, offering confirmation that the housing recovery remains on course. The Commerce Department said sales jumped 18.0% to a seasonally adjusted annual rate of 504,000 units. That was the highest level since May 2008 and marked the second straight month of gains. July’s sales were revised to show a 1.9% gain instead of the previously reported 2.4% drop.
• FedEx Corp., a leading package delivery and business services firm, reported earnings of $2.10 per share, an increase of 37.3% over year-ago earnings of $1.53. The firm’s earnings topped the consensus estimate of analysts by $0.14. The company reported revenues of $11.7 million, an increase of 6.0%. Management attributed the company’s results to strong performance at FedEx Ground, volume and revenue increases at FedEx Freight, and healthy growth in U.S. domestic volume at FedEx Express.
• Cermaq, a Norwegian state-controlled salmon producer, has agreed to be acquired by the Mitsubishi Corporation of Japan for $1.39 billion. Cermaq, which has operations in Chile and Canada, as well as in Norway, is one of the biggest salmon farming companies in the world. It accounted for about 6% of the global market last year. Mitsubishi said that it had agreed to acquire Cermaq for $15.11 a share in cash. Mitsubishi Corporation will help strengthen Cermaq’s presence and reach in the important Asian markets.
Sources:
1. http://www.cnbc.com/id/102028719 – CNBC
2. http://www.cnbc.com/id/18080780/ – CNBC
3. http://bit.ly/1rvPY8m – FedEx Corp.
4. http://nyti.ms/YAVdbm – NY Times Dealbook
Planning Tips
Planning Tips for Minimizing Your Property Tax Assessment
Property taxes can be burdensome for a homeowner. They tend to rise steadily over time and, even when you pay off your mortgage, the taxes keep on coming. However, there are some things homeowners can do to minimize the property tax burden. Below are tips you can use to lessen your property tax pain.
Review your property tax card – Few homeowners realize they can go down to their town hall and request to view (or receive a copy of) their property tax cards from the local assessor’s office. The tax card provides the homeowner with information the town has gathered about the property over time. The card includes information about the size of the lot, the precise dimensions of the rooms, and the number and type of fixtures located within the home. Other information may include a section on special features, or notations about any improvements that have been made. As you review this card, note any discrepancies and then raise these issues with the tax assessor. The assessor will either make the correction and/or conduct a re-evaluation. Mistakes are common. If you can find them, the township has an obligation to correct them.
Check the tax impact before you build – Any structural changes to a home or property will increase your tax bill. A deck, a pool, a large shed, or any other permanent fixture that is added to your home will increase your tax burden. With this in mind, homeowners should investigate how much a new addition might cost in terms of property tax prior to construction. Call the local building and tax departments. They will be able to give you a ballpark estimate.
Limit the “curb appeal” – Tax assessors are given a strict set of guidelines to go by when it comes to the actual evaluation process. However, the assessment still contains a certain amount of subjectivity. This means more attractive homes often receive a higher assessed value than comparable houses that are less physically appealing. Keep in mind, your property is essentially being compared to your neighbors’ during the evaluation process, as well as others in the general vicinity. While it may be difficult, resist the urge to primp your property prior to the assessor’s arrival (which is usually scheduled). Finally, if possible, do not make any physical improvements or cosmetic alterations to the home (new counter tops, stainless steel appliances, etc.) until after the assessor has conducted the evaluation.
Research your neighbors – As noted above, information about your home is generally available at the local town hall. What many individuals do not realize is that in many cases, information about other home assessments in the area is also available to the public. It is important to review comparable homes in the area and general statistics about the town’s evaluation results. You can often find discrepancies that could lower your taxes. For example, say that you have a four-bedroom home with a one-car garage and your home was assessed at $250,000. Your neighbor also owns a four-bedroom home, but that house sports a two-car garage, a 150-square-foot shed, and a beautiful swimming pool. Despite this, public records show that your neighbor’s home was valued at $235,000. Was there a mistake? There probably is an error unless your property has some other distinguishing characteristics that explain the discrepancy. With all of this in mind, if an error is found, it pays to bring it to the assessor’s attention as soon as possible so that you can get a reassessment if necessary.
Know how and when to challenge an assessment – Schedules vary, but local governments commonly send assessment notices to homeowners in the first few months of the year. As soon as you get yours, or even before, check the deadline for challenging the value. You may have just a few weeks. And be sure you know how your locality assesses property. When challenging an assessment, you need to demonstrate the objectivity of your opinion. And for that, it is best to hire an appraiser. The appraiser’s role is to estimate the value of the property. Appraisers are state-certified and in most areas, they have professional associations you can contact for referrals. The cost is typically $300 and above.
Sources:
1. http://bit.ly/YBNZDW – Bankrate.com
2. http://bit.ly/1rwaKET – Kiplinger
3. http://bit.ly/ZjtsW3 – Investopedia
4. http://on.wsj.com/1l0SbSG – Wall Street Journal
5. http://bit.ly/1krhsuh – Zillow.com
6. http://bit.ly/10aGCVi – US News & World Report
